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Web Feature | SoCal Val

Reaching the "Unbanked"

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It’s hard to imagine that hundreds of thousands of Angelenos don’t have an ATM card, or a checking account, savings account, retirement account, etc. But it’s true. LA is the #1 city in the country for “unbanked” as they are called.

So how do they function? They hassle with getting other people to cash their checks. And keep their cash at home—not a very safe option. They also go to expensive payday lenders, check cashing places or pawn shops. There are nearly 1400 of these places in L.A. compared to less than 700 banks. Wow... banks outnumbered 2 to 1. And check out this map that shows how much money payday lenders drain out of mostly minority L.A. neighborhoods.

I also didn’t have time to go into the reasons banks don’t go into poor areas. It’s partly because low income areas are underrated. The census under-counts a lot of immigrants and their assets. But when banks have gone in they can be very successful. But they have to do it right, by making connections first with local leaders, churches, schools, sports leagues and clubs. So the word goes out that the bank is a friendly place and can save you money. In these communities word of mouth is very helpful.

And then once a new customer opens an account, the banks have to be sure not to "burn" them with high overdraft fees. Financial literacy is also something smart banks are doing. They are also training and hiring locally. The Wells Fargo in Pacoima is an example of a bank who has done all of this and is thriving.

I also didn’t have time to point out that San Francisco launched a “Bank on San Francisco” campaign in 2006. They were hoping to get 10,000 new accounts. They ended up with 16,000. Banks really can change the “trajectory” of families who are paying too much for basic financial services. Here’s a link if you want more info on the “Bank on L.A.” campaign.

And here’s a link to a really good non-profit group that helps with financial literacy and other issues. It’s the Community Financial Resource Center just south of USC.

(Almost done.) Here’s a very good report by a USC professor, Manuel Pastor, who looks in detail at L.A’s 300,000 unbanked households.

And finally, here’s an op-ed piece by Manuel Pastor from the L.A. Times.

LEAVE A COMMENT Leave Comment  

I just watched your program on this subject. I have watched PBS all my life and even donated a car to you. I figured a lot of the issue involving latinos and banks revolved around illegal immigrant status and under the table employment. This was not discussed at all. Why would people worry about banks when deposits are insured for 100k, now 250k? Especially when we are probably talking about such small amounts? Of course, if you have something to hide - legally being here or taxes unpaid - you might not want to leave a paper trail. I think this should have been discussed. I am sure it is a big part of the issue.

Can we all say 'illegal aliens'? That's why the 'majority' of these people can't go to banks--no valid ID, go figure, they're not supposed to be here! I really had to laugh when the old fat lady said she kept her money in a Mexican bank--illegal & stupid! LOL

I just watched your coverage of Angelinos without bank accounts. You really needed to talk about credit unions. I haven't been near a traditional bank for years. The credit unions are owned by the people who put their money there.

I always figured that KCET viewers were more open-minded, but clearly that´s not the case based on the first 2 posters above. Besides being ignorant, ´johnandken´ takes it a step further with blatant racism!

You want to know why people don´t trust/like banks? Allow me to break it down for you. Banks, have traditionally, NEVER served ¨underserved¨ communities. Whether it´s attempting to secure a business loan, getting charged exorbitant rates for simple services or blatant ¨redlining.¨ People in these communities have never seen banking institutions as friends. Quite the opposite, more like thieves. Why would I give a bank all of my money, which they use to lend out at hefty interest rates, when they´ve never cared about me OR my community? This feeling is heightened during this recession. Banks are getting bailed out left & right but the main problem is that those bailouts are not trickling down to the community-level.

Surely, the issue of immigration plays a part, but it´s a minor one. Banks just don´t evoke a very positive image in said communities. It is up to the banking institutions to better inform everyone. Fiscal knowledge just doesn´t seem to be something they care about or espouse.

An ancillary issue I would´ve liked to have seen discussed is the fall of community banks. Aside from fiscal education, community banks are the answer, in my humble opinion. These are the banking institutions that traditionally have served ¨underserved¨ communities by providing business/home loans when all big banks were doing was ¨redlining¨ said communities & then denying it when confronted with empirical data. Sadly, however, community banks these days are few & far between. The one-two punch of the recession plus the merging of many financial institutions have virtually eradicated community banks from the fiscal landscape. Sadder still is that there are no replacements for community banks on the horizon. The closest thing I see to their replacements are credit unions (which might be difficult to access based on your situation).


ps. Ms. Zavala, thank you so much for having this show, it´s wonderful. However, would a quick spell/grammar check hurt before posting your blog? Besides not looking very professional, it does a great disservice to the quality of show that ¨SoCal Connected¨ is.

Hi Miguel --

Thanks for you thoughtful response to the banking story. It is a shame that there are not more community banks that make underserved folks feel comfortable.

And yes.. spell check next time for sure. I was in a hurry this time.

Gracias.. Val

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